Frank Backs Mortgage Cram-Down in Finance Reform Bill

Posted on December 9, 2009. Filed under: Uncategorized |

Dec. 8 (Bloomberg) — The mortgage “cram-down” bill that stalled in Congress earlier this year will be attached to broader legislation and voted on this week, House Financial Services Committee Chairman Barney Frank said.

Frank, a Massachusetts Democrat, said today he will support a full House vote on the measure, which House Judiciary Committee Chairman John Conyers will offer as an amendment. The House begins debating financial-industry regulatory changes including stricter rules for derivatives and mortgage lending.

The cram-down provision would let federal judges lengthen mortgage terms, cut interest rates and reduce loan balances for homeowners in bankruptcy court, even if the lender objects, on the borrower’s primary residence.

The amendment is identical to legislation that passed the House in March and later failed to get to a vote in the Senate. Bankruptcy judges are now allowed to alter loan terms on vacation homes or investment properties. Primary residences used to be eligible before Congress rewrote bankruptcy laws in 2005.

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